UOB merges Indonesian units

Singapore-based United Overseas Bank (UOB) proposes the merger of PT UOB Indonesia and PT Bank UOB Buana to create a Rp33.43 trillion bank.

According to its prospectus published this morning, Bank UOB Buana will be the surviving entity with combined asset of Rp33.43 trillion and equity of Rp6.09 trillion.

After the merger, UOB Buana will have 215 offices. UOB Buana reported net profit of Rp443.9 billion last year, increased from Rp321 billion in 2008. Meanwhile, UOB Indonesia booked net profit of Rp278 billion last year, increased from Rp226 billion in 2008.

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Maybank subsidiary reported net loss

PT Bank International Indonesia (BNII) Tbk, a bank controlled by Malaysia's Maybank, reported consolidated net loss of Rp40.97 billion last year against net profit of Rp468.7 billion in the previous year.

BII actually reported higher net interest income of Rp3.1 trillion against Rp2.75 trillion in 2008. The bank's other operational income declined slightly to Rp1.678 trillion, but its other operational expense increased to Rp3.05 trillion. Provision of write off on productive/non-productive assets surged from Rp1.08 trillion to Rp1.73 trillion. As a result, BII reported operating loss of Rp12.35 billion against operating profit of Rp395 billion in 2008.

BII had total asset of Rp60.96 trillion as of December 2009, increased 7.2% from Dec 2008. The stock closed unchanged at Rp285 today. At that price, BII has market cap of Rp14.258 trillion or about US$1.52 billion.

Two years ago, Maybank paid US$1.24 billion for 55.6% shares of BII. Maybank then purchased 41% shares from the market at Rp510. In total, Maybank spent over US$2.3 billion in BII. Maybank currently controls 97.5% shares in BII.

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Bank Capital sold at 49% discount

Shareholder of Bank Capital offloaded 23.6% shares in the bank to unidentified buyer at 49% discount from the last quoted price.

About 1.07 billion shares were exchanged hands today at Rp46 per share or a total consideration of Rp49 billion. Bank Capital is a small bank controlled by Mr Danny Nugroho (21.7%), Indigo Investment Ltd (15.44%), Zen Gem Investments Ltd (14.34%), TFI (X) - TRA Ordinary (11.96%), First Financial Company Ltd (11.47%), Credit Suisse, Singapore (8.26%), and public (16.94%) before the transaction.

Bank Capital had total asset of Rp2.32 trillion as of Sept 30, 2009 with net equity of Rp501 billion. The bank reported net profit of Rp15.3 billion in nine months of 2009, increased slightly from Rp13.2 billion in the same period of 2008.

Why someone sold 23.6% shares at 41.8% of equity?

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Sebastian Paredes resigns from Danamon

Juan E. Sebastian Paredes M has tendered his resignation letter as chief executive officer (CEO) of Bank Danamon. He has been in the position since May 2005. Danamon had total asset of Rp100 trillion as of Sept 2009, while its market capitalization surged 112% since April 2009 to Rp44 trillion.

People close to Bank Danamon confirmed the rumor that Sebastian Paredes resigns as the CEO of the bank. "There will be a media briefing on Monday about that," one source at Danamon said Friday night. It is not clear why Sebastian resigns.

Danamon told IDX Monday morning that his resignation will be effective after the bank's shareholders meeting scheduled in April 2010.

Sebastian was appointed CEO of Danamon in May 2005. An Ecuador citizen, Sebastian born in 1961. Graduated with bachelor of science from California State University, Sebastian (his full name is Juan Eugenio Sebastian Paredes Muirragui) got his MBA from Instituo de Empresa, Madrid, Spain. He was managing director of Citigroup for South Africa before the Danamon job. 

Danamon is indirectly controlled by Singapore's Temasek Holdings. Danamon is the fourth largest bank in Indonesia in terms of market cap, behind BCA, Mandiri, and BRI, but the sixth in terms of asset behind Mandiri, BRI, BCA, BNI, and CIMB-Niaga.

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ATM frauds escalated

Forget about the gigantic fraud at Century by its owners and management which consumed our energy in the past few months. It is time to take care your own wallet from ATM skimmers, capers, etc. State bank BNI reported that at least 19 customers have claimed a total loss of Rp200 million from two ATM machines in Denpasar, Bali alone.

Yesterday, the central bank, Bank Indonesia, admitted they have received reports about ATM frauds from six major banks: Mandiri, BCA, BNI, BRI, Permata, and BII. One of the banks experienced 236 ATM frauds which cost Rp4.1 billion. Central bank suspected international crime syndicate behind the frauds.

BCA had earlier reported indications of PIN theft done through peeping by unauthorized parties while customers were doing transactions at BTA ATMs in Kuta, Bali few weeks ago. This week, at least 10 BCA customers reported similar frauds in Kuta, Bali. Police suspected Russian crime network behind the ATM frauds.

Later on Thursday, BCA's vice president director Jahja Setiaatmadja, told Detik.com that about 200 depositors hit by ATM frauds with total loss of Rp4-5 billion. BCA has repaid most of them, "because there are evidences of skimming."

One of the victims saw Rp75 million disappeared from his account at BCA with one Rp5 million transfer, 6 for Rp10 million each, and five for Rp2 million each. The next day, he lost another Rp70 million.

Indonesian police claimed they have arrested at least six members of a crime organization led by a Russian living in Toronto, Canada.

Police also seized 70 SIM Card, tens of saving account book, and ATM cards used in the phone banking fraud. Police predicted 3,000 people have become victims of banking frauds with total funds embezzled of around Rp300 billion.

Some of the criminals equipped with guns and took physical money from ATM, so the bank is the victim, not the depositors. Last June, Depok police in West Java arrested 11 ATM thieves, eight of them are military guys. They embezzled Rp111 million from BNI's ATM in Limo, Depok. It is easier to take down guys like this. But money transfer and cyber transfers are the most dangerous ones.

You're lucky if the bank recover your losses. But there are so many people out there have been forced to swallow bitter pill.

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Permata appoints 3 new directors

Shareholders of Bank Permata approved the nomination of Chisca Mirawati, Timothy Utama, and Sunil Metha as new directors for the bank. They will be effective directors after getting approval from Bank Indonesia. They are all former executives of Standard Chartered Bank, controlling shareholder of Bank Permata (BNLI).

Chisca will become the new director for compliance at Permata. She held the same position at Standard Chartered Indonesia. Chisca joined Stanchart in May 2006 as assistant vice president legal and compliance and assigned as compliance director in September 2006. She had an extensive experience in legal and compliance area during her tenure in state bank BNI in the period of 1994-2006. Graduated from Padjajaran University as bachelor of law, Chisca obtained MBA in banking and finance from Maastricht School of Management, Netherlands.

Meanwhile, Timothy Utama is nominated as director for technology and operations. Timothy has over 20 years of global experience, working in senior positions in Indonesia, Singapore, Australia, and India.

Timothy rejoined Standard Chartered Bank in May 2008 after spending three and half years with ANZ Group Office in Melbourne as head of trade sales.

Sunil Metha, meanwhile, has over 30 years experience in risk management, operations, and relationship management at Standard Chartered Bank. He will be director for business development at Permata.

Bank Permata reported total asset of Rp56.8 trillion as of Sept 30, 2009 or about US$6.1 billion. The bank has market capitalization of Rp16.3 trillion or about US$1.76 billion. But the stock is rarely traded. Permata reported net profit of Rp495 billion in Jan-Sep 2009, increased 29.2% from the same period of 2008.  

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Mandiri takes No.2 spot

State-bank Mandiri is the largest bank in terms of assets (Rp366.5 trillion as of Sept 2009), but the bank is only second behind Bank Central Asia (BCA) in terms of market capitalization (or value, if you like). Still, Mandiri's stock price outperformed Bank Rakyat Indonesia (BRI) to take the number two spot from BRI.

According to Yosefardi.com, Mandiri has market capitalization of Rp97.4 trillion as of December 30, 2009, higher than BRI (Rp93.4 trillion), but still far behind BCA (Rp119.6 trillion). But in terms of market value per asset, BRI is better than Mandiri, because BRI's asset was only Rp275.99 trillion as of Sept 2009.

Mandiri's stock price surged 132% this year, while BRI increased 67%. BRI reported net profit of Rp5.3 trillion in Jan-Sep 2009, while Mandiri booked Rp4.62 trillion profit in the same period.

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BTN kicks off IDX trading

State-owned bank PT Bank Tabungan Negara (BBTN) Tbk kicks off trading of its stocks on Indonesia Stock Exchange (IDX) on Thursday, December 17. The IPO price is Rp800. BTN raises Rp1.888 trillion from the IPO. This is also the biggest privatization this year.

After years of on-and-off, BTN will finally float 8.62 billion shares on IDX. Government of Indonesia will still the majority owner with 72.6%. At Rp800 per share, BTN is valued Rp6.898 trillion or about US$726 million. The stock, BBTN, will be traded on IDX main board.

BTN is the 10th largest bank Indonesia by asset. The bank has total asset of Rp48.7 trillion as of June 30, 2009. The bank generated net profit of Rp430 billion last year, increased modestly from Rp402 billion in 2007 and Rp364 billion in 2006. The bank reported net profit of Rp198 billion in the first half 2009.

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Bankers worry more about Moody's than people

Government officers, bankers, and central bank officers were pissed off by Moody's negative outlook on Indonesian banking. They worry more on the rating agency's view that what Indonesian people think of them. Pathetic! 

These guys immediately responded Moody's "view", but pay little attention to significantly bring back the banking system as an intermediary for economic and social development.

Bankers immediately cut rates for people's saving accounts or time deposits whenever Bank Indonesia cut the benchmark rate. But they will keep postponing lending rates cut. They always argued that their "cost of funds" were too high. But in reality, banks are the most profitable sector of the economy. Take a look at the first half 2009 results of major banks.

BCA posted net profit of Rp3.3 trillion in six months, surged 35.9% from the same period last year. BNI reported net profit of Rp1.2 trillion, skyrocketed by 175%. Bank Mandiri recorded net profit of Rp2.93 trillion, increased 12% from the same period last year.

So, when all other sectors posted significant drop in profit margin, banks reported historic high of net  profit. When lots of people lost their jobs, because their employers suffered from paying significantly higher interest rates than their peers in other countries, the bankers are busy to write complaint letters to Moody's.

Not that we agree with Moody's. In fact, we also hate domination of rating agencies on "our outlook", because one small change in the "rating" may cause millions of people losing jobs. But it's just too sad that our bankers would respond quickly agencies like Moody's than those who provide "cheap funds" and pay "costly interests" to their huge profits. 

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Stanchart lost court case on derivatives

Standard Chartered Bank lost a court case on derivate transaction filed by PT Nubika Jaya. Court says the bank violated central bank regulation, Bisnis Indonesia reported.

Central Jakarta Commercial Court ruled in favor of Nubika Jaya, a palm oil producer, on Thursday, July 30. Stanchart is ordered to return US$5.25 million funds to Nubika, while Nubika shall return Rp52.18 billion to Stanchart.

Judges said Stanchart violated Bank Indonesia Regulation No. 7/6/2005 about Transparency of Banking Products and The Utilization of Customer's private data.

Nubika entered into a callable ratio forward currency option with Stanchart in September 12, 2008. The court of justices blamed Stanchart for the agreement written in English with "complex terms".

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BCA profit surged 36% to US$330 million, people?

Bank Central Asia (BBCA) reported net profit of Rp3.3 trillion or about US$330 million in the first half 2009, surged 36% from the same period last year. What crisis?

Indonesia's major banks keep telling "good news" to their "shareholders", but probably not for the depositors and debtors. 

BCA said its strong first half results were driven by increases in net interest income and fee-based income, and by a tax rate of 23% in the first half 2009 compared to 30% in the first half 2008. 

The bank received a benefit of a 5% reduction of income tax rate following the implementation of Government Regulation No. 81/2007 for qualified listed companies so that BCA's full year 2008 income tax rate was adjusted to 25%. How generous the government is.

Indonesians are also generous to BCA. Third party funds grew by 15.2% to Rp219.4 trillion at the end of June 2009, where total deposits increased 13.7%. Outstanding loans? Well, it increased 12.3% only to Rp107.3 trillion.

They got people's money for 2%, and then loaned them to people at above 14%. Such a huge spread is considered "inefficient" for the economy, but generous for the shareholders. That's why BCA, like BRI, booked over Rp19 trillion net profit in the 2004-2009 period only. Where in the world you can get that?

BCA is controlled by Budi Hartono family (Djarum Group). Market capitalization? US$9 billion. Unbelievable! Djarum and Farallon acquired 51% shares of BCA for few hundred million USD, and in seven years, they got US$4.5 billion plus dividends. Probably the dividends only had repaid the capital investment to acquire the bank.

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Five years prison for Sugiharto Wiharjo

Tanjung Karang district court, Lampung, sentenced Sugiharto Wiharjo, owner of Tripanca Bank, five years prison for embezzling Rp750 billion funds from the bank. Such a light sentence!

The sentence is lighter than prosecutors' demand of seven years prison. Worse, the businessman is only ordered to pay Rp50 billion fines for the crimes.

Court found Sugiharto Wiharjo AKA Alay of embezzling Rp750 billion from the bank he owned through various "schemes". Two directors of Tripanca Bank, Podijono Wiyatno and RE Soedarman, had also been sentenced three years and three months jail plus Rp10 billion fines in the same case.

According to witnesses and evidences found by police, the convicts embezzled the funds through dubious loans to 177 names. Tripanca Group, parent of Tripanca Bank, collapsed late last year leaving five major banks (BRI, Mandiri, Deutsche Bank, BEI, and Mega) in a massive Rp1.7 trillion losses (bad loans). Public funds from two local administrations in Lampung at the combined amount of Rp135 billion also disappeared from the bank. It is not clear how these administrations will recover. Similarly, it is not clear how the five banks will recoup their money.

But five years prison is clearly a light sentence. Prosecutors may have to read Bernie Maddoff's case.

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Danamon acquired more Adira shares

PT Bank Danamon (BDMN) Tbk has finally acquired 200 million (20%) shares of PT Adira Multidinamika Finance (ADMF) Tbk from Mega Value Profits Ltd for about US$140 million. 

Crossing of shares have been completed this morning at Rp7135 per share. After the acquisition, Danamon controls 95% shares in Adira. Adira stock price surged 5.71% to Rp3700 this morning. The recent peak is Rp4700 in April 30.

Last year, Bank International Indonesia (BII), also acquired majority shares in consumer financing company PT WOM Multifinance Tbk. This year, Bank Mandiri acquired another automotive financing company PT Tunas Finance Tbk.

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BI cuts further the benchmark rate

Central Bank has cut further its benchmark BI Rate by 25 basis point to 6.75% on lower inflation rate and relatively stable macro economy and banking indicators.

This is the eighth rate cut since December 2008. Bank Indonesia expects banks would follow suit with lower lending rates. The average CAR of the banking system is 17%, while non-performing loans stay below 5%. BI predicts the economy will grow between 3.5% to 4% this year while inflation could go below 5%. The 6.75% BI rate is the lowest in years.

The question, when banks will follow suit? Or will they? Well, for sure, banks will start to cut interest rates for depositors, especially the lower-income group. Big depositors will be followed. And then, may be they will cut lending rates. 

How about motorcycle financing? Well, most multi finance charged over 30% per annum interest rate to motorcyclists simply because these guys never really care about how much the factual interest rate charged. They care more on how much their monthly payment. As long as it's within their range, they would just signing up motorcycle loans of above 40% in some companies.

Adira charged 30%-37.6% for motorcycle loan last year, while WOM Finance between 30% and 34%. Is it fair to take benefit out of people's lack of mathematical calculation on interest rate?

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Bank Century's assets slashed US$860 million

PT Bank Century (BCIC) Tbk reported total asset of Rp5.58 trillion as of December 2008, dropped Rp8.67 trillion from Rp14.26 trillion in Dec 2007 due to the fraud allegedly committed by the bank's former shareholders.

According to an audited financial report for 2008 by AAJ Associates, the bank's equity was minus Rp2.17 trillion and CAR of -35.92%. As of Dec 2008, the bank had accumulated losses of Rp8.9 trillion which caused equity deficiency of Rp1.5 trillion. LPS took over the bank in December 31, 2008 and already injected Rp6.13 trillion into the bank. Third party deposits in the bank halved to Rp5.099 trillion from Rp10.25 trillion. The shareholders allegedly embezzled depositors' money through various schemes. The bank reported operating profit of Rp56 billion last year, slashed from Rp515 billion in 2007, while net loss of Rp7.3 billion is a significant drop from Rp195 billion in 2007.

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